Ford Motor on Thursday said it expects a full-year loss but also said that it should have enough cash on hand throughout the rest of this year, even if global demand drops further or the coronavirus crisis results in more shutdowns of vehicle assembly plants.
The automaker also said that on July 27 it repaid $7.7 billion of an outstanding $15.4 billion on its revolving credit facilities, and increased $4.8 billion of its three-year revolving credit lines.
Ford’s remarks came as the company published a quarterly profit much due to an investment by Volkswagen in its self-driving Argo AI unit, more than offsetting a loss led by a coronavirus-induced production shutdown.
The better-than-expected results and revenue outlook sent Ford’s shares increased by 2.5% in after-market trading.
“The strong execution allowed us to deliver much better financial results than we expected just three months ago,” CEO Jim Hackett said on a conference call with analysts.
German automaker Volkswagen in June closed its $2.6 billion investment in Argo AI, which now is valued at $7.5 billion. Each automaker holds a stake of about 40% in Argo.
Ford said it is expecting a pre-tax profit of between $500 million and $1.5 billion for the third quarter and a loss for the fourth quarter, which includes three major product launches delayed by the shutdown earlier this year.
In April, Ford warned that its second-quarter loss is going to more than double to over $5 billion due to the coronavirus crisis.
Chief Financial Officer Tim Stone said a focus on cost-cutting, a productive restart after a two-month shutdown, the strong performance by the automaker’s captive finance arm and a solid pricing environment for its automobiles had helped mitigate the anticipated loss.
The automaker said operating charges for its worldwide restructuring would total $700 million to $1.2 billion for 2020, dropping from $3.2 billion last year. Stone informed reporters that Ford’s redesign was “absolutely not stalled”.
Ford also stated it had over 150,000 reservations for the new Bronco, which will be introduced in the fourth quarter. That number was above internal expectations and the executives said they are working to boost production further, and they can possibly add another shift at a plant.
Ford ended the quarter with almost $40 billion in cash and said it should be able to maintain or exceed its target cash balance of $20 billion for the rest of the year, even if global auto demand drops or if COVID-19 forces another big wave of plant closures.
The automaker reported net income in the second quarter of $1.1 billion, or 28 cents a share, compared with a profit of $100 million, or 4 cents a share, a year ago. Excluding items, the automaker posted a second-quarter operating loss of $1.9 billion, or 35 cents per share.